U.S. stock futures are pointed higher in premarket trading, as Wall Street looks somewhat refreshed following yesterday’s breather.
Corporate earnings continue to flood in, with blue-chips General Electric Company (NYSE:GE) and Honeywell International Inc. (NYSE:HON) on the docket this morning. Elsewhere, the first reading on the July manufacturing purchasing managers’ index is slated for release.
Against this backdrop, futures on the Dow Jones Industrial Average are up 0.17%, S&P 500 futures have added 0.20% and Nasdaq-100 futures have risen 0.16%.
Options activity reversed course sharply on Thursday, with volume falling amid a rise in put activity. Overall, 13.1 million calls and 13.4 million puts changed hands on Thursday. Even the CBOE saw a bump in put volume, with the single-session equity put/call volume ratio rising to 0.61. However, the 10-day moving average remained unphased at 0.58 — its lowest point since June 11, 2015.
In equity option news, Apple Inc. (NASDAQ:AAPL) continued to garner heavy option volume ahead of next week’s earnings report, with IDC data pointing revealing disturbing Apple Watch sales data. Elsewhere, Qualcomm, Inc. (NASDAQ:QCOM) reported stronger-than-expected earnings, while Starbucks Corporation (NASDAQ:SBUX) came up short in the earnings department.
Apple Inc. (AAPL)
AAPL stock was prepared to take out the $100 mark early in Thursday’s trading, but broad-market selling pressure and a bearish report on Apple Watch sales scuttled the rally. According to IDC, Apple Watch sales plunged by 55% to 1.6 million in the second quarter from 3.6 million a year ago. Poor watch sales arrive on the heels of last quarter’s decline in iPhone unit sales, which could struggle to meet expectations again this quarter.
Options traders remain determined, however, as roughly 1.1 million contracts traded on AAPL yesterday. Furthermore, calls made up an above average 66% of the day’s take. Looking at weekly July 29 series open interest, AAPL’s put/call OI ratio for the series arrives at 0.67, with calls easily outnumbering puts among options most affected by Apple’s quarterly report. Peak call OI for the July 29 series totals more than 33,000 contracts at the much sought after $100 strike.
Qualcomm, Inc. (QCOM)
QCOM stock spiked more than 7% on Thursday despite the broad-market selling pressure, as traders cheered strong fiscal third-quarter earnings results. For the quarter, Qualcomm said it earned $1.16 per share on $6.03 billion in revenue, blowing past Wall Street’s expectations for 97 cents per share on revenue of $5.58 billion. CEO Steve Mollenkopf also offered up a positive outlook for Qualcomm going forward, with demand for higher-end chips rising due to technologies such as virtual reality.
QCOM options traders were not shy in their bullish take on yesterday’s quarterly report. More than 330,000 contracts traded on the stock, with calls making up 72% of the day’s take. QCOM is now trading just shy of $60, placing the stock well north of all major call OI strikes in the monthly August series. Only about 8,800 calls at the $60 strike stand to create any troubles for QCOM, though technical resistance in the area may be an issue.
Starbucks Corporation (SBUX)
SBUX stock is down nearly 3% premarket after the company’s third-quarter report missed expectations. For the quarter, Starbucks said it earned 49 cents per share on revenue of $5.24 billion, versus the consensus estimate of 49 cents per share on revenue of $5.34 billion. Fourth-quarter guidance fell roughly in line, with Starbucks forecasting earnings between 54 cents and 55 cents per share, while analysts are expecting 55 cents per share.
Options traders appeared prepared for the miss, as puts accounted for 52% of the roughly 264,000 contracts traded on SBUX stock.
Looking ahead to the monthly August series, SBUX is trading well below peak call of OI 17,600 contracts at the $60 strike, while the $55 strike could be an important support level for the stock. Specifically, there are about 12,000 calls and 11,800 puts currently open at the August $55 strike.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
